Thursday, February 1st, 2007 (02/01/07)


Can the industry roll out mobile advertising without annoying customers?

 Industry advocates sometimes have been quick to label the new year as the
year for a technology or service. Wireless has witnessed its share of missed
predictions with the Year of Wireless Data as well as the Year of Bluetooth,
both of which missed by a few years. So, you have to wonder if it is too
soon to call 2007 the Year of Wireless Advertising.

"That is really the salient question," says Forrester Research principal
analyst Christine Spivey Overby, co-author of a recent report on mobile
marketing titled, Is the U.S. Ready for Mobile Marketing? "I think mobile
marketing is going to pick up steam in 2007, but I would be very careful on
what that means. We're still talking about drops in the bucket," she adds.

For revenue-generating mobile advertising, 2007 is the year to figure out
business models and fine-tune projects, says Soren Schafft, CEO of Qmobile
and board member of the Mobile Marketing Association (MMA). "I think this is
the year to get ready for next year, when it's going to take off," he says.
"It's still just a little bit difficult, and I think that's getting worked
out this year," a process that continues at both companies and venues such
as the MMA, which in November released its latest mobile ad guidelines. "It
takes a while for these things to develop."

Schafft was a member of the former Telenor Interactive team that set up the
first premium SMS campaign for the soap opera "All My Children" several
years ago. But it wasn't until last year that interactive TV really took off
beyond "American Idol," with successes such as "Deal or No Deal." That's how
long it took creative forces behind TV programs to put more emphasis on
directing viewers to the call to action so they would know what to do,
according to Schafft.

Where Schafft does see activities taking off this year is the area in which
Qmobile works: producing campaigns, from TV ad spots to mobile ringtones and
wallpapers, surrounding celebrities and entertainment. The company has deals
with the likes of model Melyssa Ford to create broad-based campaigns. "We
work with brands and celebrities, and build programs around these different
groups," Schafft says. "We are basically a full production studio,"
including commercials.

Qmobile is steering away from generic campaigns to focus on celebrities and
entertainment, areas where the lines between content and advertising start
to get fuzzy. In the future, "I think you're going to see a real blurring
... between the ad and the content," Forrester's Overby says. Advertising
can be content that users like or find interesting, such as the custom
ringtones that Ford created to mimic the sound of a Mustang revving. Is it
content or an ad? Similar to content that companies such as Proctor & Gamble
create for the Web, companies also are becoming the sponsors of content that
extends their brands.

NOT THAT NEW
Some forms of mobile advertising have existed for a while, and the MMA even
declared 2006 a banner year for mobile marketing. SMS short codes, mobile
browsers that support banner ads and ad-supported applications and content
are used to varying degrees. Although major national carriers are expected
to ramp up their efforts this year, regional or second-tier carriers are
just dipping their toes in the water. Alltel, in particular, is working with
search and mobile ad integrator JumpTap, whose executives called last year's
deal a major milestone.

AirG, which has been powering social networking on mobile phones since 2000
and works with carriers worldwide, has conducted dozens of mobile ad
campaigns. The company says the response rate to advertising in its mobile
community is on average more than 10 times as effective as online. It sees
great potential in hooking up its members with advertisers that want to more
effectively target customers. "There's a lot of hype," concedes AirG
co-founder Fred Ghahramani of the mobile advertising space. "It's got lots
of potential. We have to be cautiously optimistic."

Some service providers understandably are in a wait-and-see mode. Rich
Heineman, director of communications at Helio, says the MVNO's audience
definitely knows when they're being marketed to and "if we are going down
that path, it has to be done 100% right." The company is targeting high-end
18- to 32-year-old mobile social junkies, if you will, who are willing to
pay a premium for a data-oriented offering, so offering ads to support
services may not be as paramount as it is for other carriers or MVNOs.

PERCEPTION/RECEPTION
For all the work that already has occurred to prepare the market and
marketers for mobile advertising, carriers must still contend with consumer
perception. "There's definitely a consumer aversion to what I would say is
the idea of mobile marketing," Overby says. When people think of mobile
marketing, they expect the type of advertising they see on TV or the
Internet - ads that interrupt what they're doing. Add to that the more
personalized nature of cell phones, complete with friends' and family
members' names and numbers, and ads can be viewed as even more intrusive.

That's not to say marketers should veer away from mobile ads, Overby says.
Instead, they need to emphasize abbreviated messages, leverage the tight
connection between a call to action and the action itself and offer relevant
campaigns that tie mobile and on-premise ads to the recipients' locations.

The Forrester report advocates that marketers check their campaigns for
compliance with the MMA's guidelines, noting that it will take only a few
minor infringements, or one spectacularly large one, to taint consumers'
perceptions of all mobile marketing efforts.

The upshot is early efforts show people will react positively to certain
campaigns. McDonald's placed mobile ads on WAP sites frequented by young
consumers and saw higher-than-average click-through rates to mobile coupons
valid between 9 p.m. and 4 a.m. for one night only. Clear Channel radio
station WXKS in Boston offers a text club in which listeners receive mobile
alerts and promotions and use text to interact with DJs. Forrester reports
that 48% of listeners in the club sent texts for a chance to win breakfast
with Nick Lachey.

CARRIER AWARENESS
Fortunately, carrier executives are acutely aware of consumer attitudes.
"The carriers are very careful about how they enter this space," Overby
says. "They really want to avoid some of the mistakes that were made in the
Internet and e-mail marketing."

The industry's standard operating procedure is one of opt-in marketing, so
consumers are given a choice whether to receive the ads. Still, given
consumer attitudes, it's no surprise that carriers are treading carefully.
By and large, mobile advertising remains in a testing-the-waters phase, with
some more aggressive advertisers getting out in front. "I think 2007 is
going to be a year in which a few early adopters really embrace the channel
and most advertisers get serious about their pilots," Overby predicts.

To schedule an interview with a Qmobile spokesperson contact Hugh Norton (ext. 124) or Megan Erhardt (ext. 136) at (703)-683-5004